Employment Law Reforms

Business, Innovation and Skills written statement – made on 12th July 2013.

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Photo of Jo Swinson Jo Swinson The Parliamentary Under-Secretary of State for Women and Equalities, The Parliamentary Under-Secretary of State for Business, Innovation and Skills

The coalition Government made a commitment to review employment legislation to ensure it provides the flexibility for employers without compromising fairness for employees. We have reported to Parliament at various points during the course of the employment law review and the employment-related law red tape challenge, the steps we are taking to reform UK employment legislation.

The Government have already taken significant steps in reforming employment law. We are now seeking to further reform employment law to help employers and employees. These are intended to provide greater flexibility, greater certainty at the end of the employment relationship, and greater confidence and consistency in the employment tribunals system. We are also providing employers with important tools to uses settlement agreements confidently. We are also seeking evidence on effectiveness of the whistleblowing rules to establish whether any changes are needed.

Today, we are:

Publishing the Government’s response to the consultation on reforms to the rules governing the recruitment sector.

We intend to proceed with replacing the current legislation with a new regulatory framework which removes some of the burden from business but continues to protect people who are looking for work. Regulation in the agency sector will be minimised and, for the most part, focused where workers are most at risk of exploitation.

The new legislation will support the outcomes that the Government believe are key to ensuring that workers are protected and that the sector operates fairly and flexibly; that employment agencies and employment businesses are restricted from charging fees to work seekers, there is clarity on who is responsible for paying temporary workers for the work they have done and that the contracts people have with recruitment firms should not hinder their movement between jobs. Some responses to the consultation indicated that there may be abuse of upfront fees in the entertainment and modelling sector, so we intend to speak informally to a variety of stakeholders to better understand the issues.

We also intend to change the enforcement strategy in the agency sector by moving to a more focused and targeted enforcement regime. In future we will focus Government resource on helping the most vulnerable workers who need protection, particularly those on the national minimum wage (NMW), by moving resources from the employment agency standards inspectorate within BIS to HM Revenue and Customs’ NMW team. The NMW team will investigate complaints of non-payment but individuals will also be able to enforce their rights informally and through the courts. A small team will remain in BIS to enforce the remaining regulations which apply to agencies.

Publish the Government’s response to the consultation on how early conciliation will work in practice. This is an important part of implementing the change in the Enterprise and Regulatory Reform (ERR) Act which creates an obligation for individuals to approach ACAS in the first instance to explore conciliation before being able to submit a claim to an employment tribunal.

This consultation was technical in nature, and sought views on how to administer the scheme in a way that ensures parties engage effectively with ACAS, while not adding unnecessary delays to the dispute resolution process. Responses on the procedural forms, the early conciliation support officer model for conciliation, exemptions, limits on ACAS attempts to contact parties and respondent-led early conciliation have not led to any substantial policy changes. They have helped us sharpen the proposed model however, and BIS will continue to work with ACAS and HMCTS towards implementation in early 2014.

Publish a call for evidence on the whistleblowing framework. In summary:

The Government believe that the overall framework works well, but changes in the way the labour market functions and ways of working since the introduction of the framework in 1998 mean that the time is right to look at the effectiveness. We would like to establish whether:

The categories of disclosure which qualify for protection are still effective in capturing all instances of wrongdoing.

The methods by which the disclosure is made are still relevant and effective.

The list of prescribed individuals/bodies, that is, to whom the disclosure can be made, captures the individuals and bodies sufficiently to ensure the whistleblower benefits from the protection.

The coverage of the definition of worker is sufficiently broad to capture all those that need to be protected by the framework.

Additional changes being made, and which this House has already scrutinised are:

Bringing into effect settlement agreements. These offer a consensual and beneficial end to the employment relationship, avoiding the cost and distress of a tribunal. We are building on the existing system to facilitate their increased use, making it easier to make offers of settlement outside of dispute situations.

A measure in the ERR Act 2013 makes the offer of a settlement agreement inadmissible as evidence in an unfair dismissal claim.

The legislative change will be accompanied by a new statutory code of practice and substantive guidance, to give employers and employees as much clarity and certainty as possible to negotiate settlement, including template letters and model agreements, and advice on how to negotiate settlement.

The measure and statutory code will come into effect on 29 July.

Commencement of ERR Act provisions on the Unfair Dismissal Compensation Cap:

Bringing into force the measure in the ERR Act which caps the compensation element of unfair dismissal awards at 12 months’ pay, in addition to the existing overall cap of £74,200 (the lower of which would apply in an individual case).

This cap aims to give employers and employees more realistic expectations about unfair dismissal award levels.

The draft Statutory Instrument which introduces this cap was laid before Parliament on 10 June, and is subject to the affirmative procedure. Subject to completing parliamentary approval process, we would into to bring this measure to come into force on 29 July.

The new rules coming out of the “Fundamental Review of Employment Tribunal Rules” by Lord Justice Underhill have been laid in Parliament and will come into force on 29 July (to coincide with the planned introduction of ET fees). These changes will make tribunals easier to understand and more efficient. The rules are already in the public domain, and the announcement would help further signal the changes to users of the ET system and reassure stakeholders that Government are taking action to address weak or vexatious claims. At the same time. Government will also make some small amendments to the way in which interest is charged on employment tribunal awards, designed to encourage prompt payment. This approach was set out in the Government response to Lord Justice Underhill’s review.

These measures will reduce risks to employers, increase their flexibility to deal with workplace issues, and decrease the costs of resolving disputes. Business will have the support to resolve workplace disputes earlier and, if they proceed to employment tribunal, they will experience a quicker, more efficient process.

I will be placing copies of the documents in the Libraries of both Houses.